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Virgin Australia (ASX:VAH) - CEO, Paul Scurrah - The Market Herald
CEO, Paul Scurrah
Source: The Australian
  • In response to the ongoing uncertainty around COVID-19, Virgin Australia (VAH) has suspended international flights from March 30 until June 14 2020
  • Additionally, it has slashed domestic flying capacity by half until mid-June
  • This decision has been looming ever since the airline announced it would be cutting costs and reducing flights around the world
  • A significant number of Virgin's domestic and international fleet will be temporarily grounded as a result of the Government's announcement
  • However, to enable travelling visitors to leave Australia and Australians to return home, the company will operate a small international schedule between now and March 29
  • For people with bookings between now and June 30, Virgin is offering flexible booking options to accommodate for the inconvenience
  • Virgin is up 11.1 per cent and shares are trading for 7 cents each

In response to the ongoing uncertainty around COVID-19, Virgin Australia (VAH) has suspended international flights and has slashed its domestic flying capacity by half.

This decision was looming ever since the airline announced it would follow its peers in reducing flights around the world and cutting costs such as executive pay.

"We have entered an unprecedented time in the global aviation industry, which has required us to take significant action to responsibly manage our business while balancing traveller demands and supporting the wellbeing of Australians," CEO and Managing Director Paul Scurrah said.

"We have responded by making tough decisions which include reducing our domestic capacity and phasing in the temporary suspension of international flying for a period of two and a half months," Paul added.

International changes

Due to the new restrictions outlined by the Government, Virgin will temporarily suspend international flights from March 30 until June 14 2020.

This means its five Boeing 777, one Airbus A330 and fourteen Boeing 737 aircraft fleet will be temporarily grounded.

Additional changes include Melbourne to Los Angeles flights will be suspended from March 20, newly-offered direct flights from Brisbane to Haneda are postponed from March 29, and inaugural Melbourne to Denpasar services will be postponed from March 29.

For travelling Australians who need to return home, Virgin is allowing a small bracket window of reduced international flights until March 29. This also applies to visitors who are currently in Australia but need to return to their homes overseas.

Domestic changes

Similarly, domestic flights have been reduced by 50 per cent until June 14.

This includes the grounding of 20 Boeing 737, six A320, two ATR and five Airbus A330 aircraft from Virgin's domestic fleet.

Virgin is yet to announce details around route and schedule changes for its airline, as well as for its subsidiary, Tigerair Australia. The company is aiming to announce this within a week.

Impact

For people who have new or existing bookings between now and June 30 2020, Virgin is offering flexible booking options.

Guests with bookings until the end of June can change their flight to a later date, and/or a different destination, without being charged an additional fee.

Those who no longer wish to travel can cancel their flight and use the value of their booking as a travel credit.

The company has experienced an overwhelming amount of customer queries and requests, therefore it has a dedicated customer care hub on its website to deal with the surge of customer queries and travel changes.

"The changes announced today will affect our people and we are having constructive discussions with team members and relevant unions," Paul said.

As previously announced, Virgin has already taken precautionary measures to reduce costs in order to soften the economic burden. These have included a temporary reduction in Chairman and Directors' fees by 15 per cent, removal of management bonuses, no base salary increases for non-EA team members and additional leave measures.

But the CEO has ensured that wherever possible, the company will try to avoid redundancies through the use of accrued leave, leave without pay and redeployment.

Virgin is up 11.1 per cent and shares are trading for 7 cents each at 12:29 pm AEDT.


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